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Clarity on the emergency wage subsidy for businesses and the emergency response fund for individuals

Dear clients and readers,

Yesterday the Canadian Finance Minister, Bill Morneau, provided further details on the Canada Emergency Wage Subsidy (CEWS). There are still many unanswered questions, but we are hopeful that answers will become more clear in the coming days. Fortunately, more information did come forth about the Canada Emergency Response Benefit (CERB) for individuals. Both programs are summarized below.

 

Please note that if you don’t currently have direct deposit set up with CRA, do it now. This will ensure you receive swift payment of your benefits.

 

Canada Emergency Wage Subsidy (CEWS) for businesses

 

Here are the highlights:

  • This is a federal subsidy that pays 75% of employee wages for up to three months up to a max of $847/employee
  • Funds will start to become available for this program in six weeks
  • Funding will be retroactive to March 15th, 2020
  • Based on my analysis, there is going to be a cash crunch with businesses over the next six to eight weeks that still have employees but have drastically reduced revenues. If this is your business, you will soon have access to a $40K line of credit through the Canada Emergency Business Account (CEBA).  But, there still are no portals to apply for the CEBA.
  • More than likely this subsidy is taxable
  • We still have no answers for those businesses who primarily employ contractors. All language so far suggests that it is for employees. Thus, independent contractors would have to apply for the CERB (below).
  • It is clear that the CEWS will not help all small businesses. If you are ineligible, please advocate for yourself and your business with your local representative.

 

Qualifications:

  • Business, Charity or Not-for-profits
  • Businesses experiencing at least a 30% revenue reduction resulting from the COVID-19 pandemic
  • The revenue comparison period is over prior year (ie. March 2020 vs. March 2019) for March, April, and May
  • If the business did not have March 2019 comparatives (ie. a startup), the government is trying to determine other comparative options such as month over month comparatives. 

 

Application Process:

  • In three weeks a new online portal on the CRA website will become available 
  • The payment to the business will be provided through direct deposit
  • You must attest that you are doing everything you can to pay the 25% top up
  • You need to reapply every month to collect

 

Here’s the new web page that was released about the CEWB.

 

Please note that the Temporary Wage Subsidy remains unchanged. It represents 10% of the gross wages that you pay in a pay period and provides you with immediate cash relief by reducing the source deductions that you have to remit to CRA.

 

Canada Emergency Response Benefit (CERB) for individuals

Some additional details were announced yesterday, and I’ve summarized them below. Further information is also available in our previous blog post.

 

Here are the highlights:

  • This is a payment of $2000/month, paid monthly
  • Starts April 6th
  • Payment to be received in three business days for direct deposit and 10 business days by cheque
  • If you are already collecting EI, you cannot collect CERB
  • If you have already applied for EI but have not started receiving benefits because you are ineligible, your application will automatically be transferred over to the CERB program.

 

Qualifications:

  • Minimum Age of 15
  • This covers individuals who are ineligible for EI or sickness benefits, but that stopped working due to COVID-19
  • Earned $5000 in income in 2019 or 12 month period prior to application
  • Self employment and/or Maternity/Parental Benefits can be included as income
  • If you expect to be without income for at least 14 consecutive days

 

Application Process (from April 6th):

  • Inside CRA My Account click on the COVID-19 banner to apply
  • You can call the Toll Free number- 1-800-959-2019
  • You will need to apply and reconfirm eligibility every 4 weeks
  • They have staggered application dates based upon the month of your birth to prevent the website from crashing:
 
If you were born in the month of Apply for CERB on Your best day to apply
January, February or March Mondays April 6
April, May, or June Tuesdays April 7
July, August, or September Wednesdays April 8
October, November, or December Thursdays April 9
Any month Fridays, Saturdays and Sundays

 

For additional details visit the dedicated pages the government has set up:

CERB Program Details

 

NOTE: There will be a heavy audit process on these subsidies to ensure that businesses and individuals are not taking advantage of the system. Stiff consequences are promised for those that abuse the system.

 

Stay safe and healthy. We will be posting important updates as they roll out.

Thank you,

Lesley-Anne